Knowledge base

What is an OCO Order

The art of successful trading in financial and cryptocurrency markets has its unique secrets that make the trading process more secure and versatile. One such trick for traders is the OCO order, an intuitive and powerful tool for securing profits, controlling risks, and minimizing potential losses.

How Does It Work?

An OCO order (from English, One Cancels the Other), or a mutually substitutable order, combines a limit order and a stop-limit order, linked by a mutual cancellation function. Both orders must be either buy orders or sell orders. Thus, as soon as one of these orders is partially or fully executed, i.e. the system automatically removes the other.

Why Are OCO Orders Needed?

Experienced traders readily incorporate OCO orders into their market trading strategies, as this tool has many advantages:

– allows placing two trades simultaneously, making the transaction faster

– gives the investor the opportunity to take advantage of short-term market movements

– provides access to effective hedging in the options market

– is ideal for those who do not want to track the value of their investments daily, while preferring to buy or sell under certain conditions

Example of Using an OCO Order

For example, a trader owns 1 BTC, which is currently trading at $19,415. He is confident that his digital asset is undervalued and expects that the price of Bitcoin will increase by another $100 soon. To ensure he locks in his profit, the trader places a limit sell order for $19,515. Additionally, he places a trailing stop order of $100, which will sell the asset if the price drops by $100 from the current high. When the BTC price increases to $19,515, the limit sell order will be executed, and the trailing stop order will automatically be canceled.